From Compliance to Strategic Sustainability: an Empirical and Legal Analysis of the Companies Act, 2013, Corporate Governance and ESG Performance in India

Abstract

India occupies a distinctive position in global sustainability regulation. Since the Companies Act, 2013, it has mandated corporate social responsibility (CSR) spending, and since 2021 the Securities and Exchange Board of India (SEBI) has required leading listed entities to publish Business Responsibility and Sustainability Reports (BRSR), with assured “BRSR Core” indicators added in 2023. This paper asks whether these mandates have moved Indian firms from box-ticking compliance towards strategic sustainability. It combines doctrinal analysis of sections 134, 135, 149, 166 and 177 of the Companies Act, the CSR Rules, the SEBI Listing Regulations and judicial treatment of directors’ duties and environmental responsibility with a three-stage maturity model (compliance, integration, strategy) and an empirical design linking governance attributes (board independence, gender diversity, CSR committee quality, assurance) to ESG outcomes. Indicative data illustrate the model and must be replaced by full-sample extractions before submission. The analysis suggests that the “comply or explain” CSR architecture has secured high formal compliance and a growing funding stream, yet spending remains concentrated in education, health and rural development, with weak alignment to material environmental risk; that section 166(2) remains underused as a stakeholder-regarding fiduciary standard; and that disclosure has outpaced assurance and enforcement capacity. The paper recommends integrating CSR with core strategy, clarifying directors’ duties, strengthening assurance and ESG-rating regulation, building board-level sustainability competence, and creating machine-readable public data infrastructure. It concludes that India’s hybrid mandatory-voluntary model will deliver strategic sustainability only if law shifts from measuring spending to evaluating outcomes